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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
The Estee Lauder Companies Inc. (XNYS:EL) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
EL
Name:
THE ESTEE LAUDER COMPANIES INC. (XNYS:EL)
Sector:
2.99B
Industry:
Household & Personal Products
CEO:
Mr. Fabrizio Freda
Total Employees:
63,000
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is -10.80% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF THE ESTEE LAUDER COMPANIES INC.(EL) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND HOUSEHOLD & PERSONAL PRODUCTS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
248.32
One Month Price Target:
$249.7
Six Month Price Target :
$256.6
Likely Price in One Year's Time:
Ticker:
$264.88
Likely Trading Range Today Under (Normal Volatility)
$247.51
Price Upper limit ($) :
$249.42
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$236.96
This week:
$222.93
This month :
$197.53
Other Primary facts
Market Cap:
87.85B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
356.90M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
9.45%
-13.49%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$301.00
$276.73
$195.64
$219.91
Medium risk (<10%) entry points
Buy Call
Sell Call
$268.83
Buy Put:
Sell Put:
$263.65
$227.75
$232.99
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
EL
Sharpe Ratio:
2.19%
Comparison:
EL, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is 81.91% higher than the industry
& is -4.09% lower than the market/S&P 500 average
Average Returns/Yield of
EL
Daily returns:
0.06%
Weekly returns:
0.29%
Monthly returns:
1.16%
Yearly returns:
9.25%
Comparison of returns:
Average annual returns/yield (last 3 years) is 50.86% above industry average
Classification:
EL, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.53
Statistical test of Returns:
EL has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.26%
Weekly Volatility:
5.04%
Monthly Volatility:
10.09%
Yearly Volatility:
34.94%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.10%
Volatility in last five trading days has been -95.76% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.57%
Weekly VaR:
-10.23%
Monthly VaR:
-20.45%
How Much Can the price of
EL
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-17%
Worst case (decline):
-70.85%
This translates to price declining to:
$205.06
This translates to price declining to:
$72.38
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
EL is a 44.36% riskier investment compared to the market/S&P 500 & is 23.67% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -8.73% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
EL
Beta in relation to market/S&P 500--0.99
Expected beta in 1 year's time:
0.828
Expected beta in 3 year's time:
1.171
Unlevered (debt free) Beta:
0.482
Beta in relation to Nasdaq (XNAS):
0.883
Beta in relation to all global stocks::
0.66
Beta Comparison & Analysis
Beta of competitors/peers::
0.65
Beta is 52.58% higher than peers
Average Industry Beta:
0.835
Beta is 18.80% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
41.21%
Sustainable growth rate is 42.08% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.040
Alpha is 954.43% above industry average alpha yield
Alpha is 255% higher than market/& is unsustainably high
Analysis of Cost of Capital of
EL
Equity cost of capital:
0.099
Equity cost of capital is 12.12% above industry mean WACC
Unlevered (without debt) cost of capital:
4.83%
Before-tax cost of debt:
2.06%
After-tax cost of debt:
1.63%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.63%
WACC is 10.98% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$50.75
Revenue growth rate per share of (3Y):
14.55
Annual revenue growth rate is 3.99% above the industry average
EPS:
$9.15
Expected Annual growth rate of EPS (3Y):
21.70%
Expected future EPS growth rate is -58.62% lower than the Household & Personal Products industry
Free cash flow (FCF) per share:
$5.29
Balance sheet equity growth per share: 39.85%
Equity growth rate per share is 291.98% higher than the industry
Debt per share
$21.54
EBITDA per share
$13.76
Valuation Analysis Today of
EL
P/E Ratio:
38.02
P/E Ratio of Competitors/Peers:
24.74
P/E ratio is 53.67% higher than main peers & is 43.79% higher than the industry
Stock price/value with industry average P/E ratio: $241.96
EL is 2.63% overvalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $50.51
Present value of the expected future dividends only: $32.64
P/S (Price to Sales ratio):
4.89
Price to sales ratio is 34.33% above the industry mean
P/B (Price to book value ratio):
14.55
Price to free cash flow: 46.94
Price to free cash flow ratio is 28.06% higher than the industry
Net income growth rate (3Y):
162.67%
Net income growth rate is -93.75% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 22.44%
Dividend yeild: 0.94%
Previous Dividend: $0.60
Previous adjusted dividend: $0.60
Previous Dividend: $2.33
Expected next dividend best case: $0.64
Expected next dividend worst case: $0.56
Average dividend payment (long-term): $0.54
Average dividend increase/decrease (growth rate) % per period: 2.62%
Expected next dividend payment date: 13/09/2022
Expected next dividend record date: 29/08/2022
-
Previous dividend payment date: 15/06/2022
Previous dividend record date: 31/05/2022
-
Dividend History:
2022-05-27--$0.60
2021-11-29--$0.60
2021-05-27--$0.53
2022-02-25--$0.60
2021-08-30--$0.53
2021-02-25--$0.53
Dividend growth rate is -124.03% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
126.93%
Net debt to equity ratio:
51.86%
Debt to assets ratio:
34.99%
Net debt to assets ratio:
14.30%
Debt-to-asset ratio is -49.02% below industry average
Ability to repay debt:
Interest coverage ratio:
29.4
Interest coverage ratio is 108.58% more than industry average
Looking forward:
Debt growth rate:
-7.85%
Annual debt growth is -117% lower than industry average debt growth rate
Debt repayment rate in previous year: 5.63%
Analysis of Key Statistics
Correlation of price movement with the market:
0.759
Statistical significance of correlation:
EL has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.556
Stock price is 36.47% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.556
Correlation of price movement with Nasdaq (^IXIC):
0.007
Covariance of price movement with the market:
0.01
Kurtosis
3.697
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.454
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
EL
Gross Profit Margin Ratio:
305%
Operating Profit Margin Ratio:
18.36%
Operating profit margin is -326.89% lower than the industry
Net Profit Margin Ratio:
305%
Effective Tax Rate:
16.47%
Effective tax rate is -22.53% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
55.41%
Return on equity (ROE) is 25.76% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
15.27%
Return on assets (ROA) is 275.88% higher than the industry
Financial Leverage:
1.5x
Current Ratio:
1.84
Current ratio is -31.61% below industry average
Cash Conversion Cycle (days):
-43.6
Cash conversion cycle is -141.30% below industry average
The remaining useful life of property plant & equipment is: 2.2 years
Stock based compensation to net income ratio:
9.74%
In-depth Efficiency Analysis
Revenue generated per employee:
287.5K
Each employee generates -57% less revenue than industry average revenue per employee
EBITDA generated per employee:
77.9K
Each employee generates -45% less EBITDA than industry average revenue per employee
Profit generated per employee:
53.3K
Each employee generates -37% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
47.5K
Each employee generates 1845% more free cash flow than industry average revenue per employee
Assets/Capital per employee
193.7K
Each employee generates 1845% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
EL
DIAGEO PLC (XNYS:DEO)
UNILEVER PLC (XNYS:UL)
TARGET CORPORATION (XNYS:TGT)
Philip Morris International Inc. (XNYS:PM)
Altria Group, Inc. (XNYS:MO)
BRITISH AMERICAN TOBACCO P.L.C. (XNYS:BTI)
COLGATE-PALMOLIVE COMPANY (XNYS:CL)
DOLLAR GENERAL CORPORATION (XNYS:DG)
KEURIG DR PEPPER INC. (XNAS:KDP)
Current Analyst Ratings
Strong buy�29%
Buy�50%
Hold�21%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
18.11B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
4.26B
13.85B
-
-
10.16B
-
-
10.16B
30.00M
167.00M
722.00M
4.91B
3.33B
3.36B
4.04B
665.00M
3.36B
Statement of Cash Flow
Date:
Period:
651.00M
Differed Income Tax :
- 230000.00K
Stock Based Compensation :
327.00M
Change in Working Capital :
554.00M
Accounts Receivables:
- 398000.00K
Other Working Capital:
- 56000.00K
Other Non-Cash Items:
- 541000.00K
Net Cash Provided by Operating Activities:
3.63B
Investments in PP&E:
-
Net Acquisitions:
- 1065000.00K
Purchases of Investments:
- 194000.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
6/30/21
2021
FY
4.96B
-
4.96B
1.70B
2.51B
603.00M
9.77B
4.47B
2.62B
4.10B
-
-
1.02B
12.20B
-
21.97B
1.69B
411.00M
359.00M
322.00M
2.87B
5.30B
7.69B
2.89B
10.58B
-
15.88B
6.00M
12.24B
- 470000.0K
-
June 30, 2021 at 6:00:00 AM
14.42B
6.06B
21.94B
-
8.10B
3.1B
-
- 605000.00K
- 1864000.00K
- 459000.00K
-
- 733000.00K
- 753000.00K
53.00M
- 1892000.00K
61.00M
- 64000.00K
4.96B
5.02B
3.63B
- 637000.00K
2.99B
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
EL
2023
2024
2025
2026
2027
$340.28
$362.96
$387.16
$412.97
$440.51